26th November 2010
Good morning. Sterling fell slightly against the euro yesterday, but then recovered again as the single currency remained under pressure due to concerns Ireland’s debt crisis will spread. The pound was fairly steady, but fell to a 1 month low against the US Dollar while US markets were closed for Thanksgiving. Rates at 08:30am this morning are as follows:
- GBP/EUR 1.1841
- GBP/USD 1.5735
- GBP/AUD 1.6190
- GBP/NZD 2.0760
- GBP/CAD 1.5913
- GBP/CHF 1.5752
- GBP/ZAR 11.126
- GBP/JPY 131.84
- GBP/NOK 9.6225
- GBP/HUF 329.32
- EUR/USD 1.3284
Bank of England show disagreement
A member of the Bank of England’s Monetary Policy Committee (MPC) has said he was concerned about support given by the MPC for the government’s plans to cut the budget deficit.
Adam Posen said that he was worried about the committee’s impartiality. “There was a difference of opinion at the MPC at the May meeting over a particular paragraph in the report that was talking about the need for a particular speed to deal with the fiscal policy,” he said.
This shows there is a lack of agreement and this will not give the markets the sense of stability that’s needed for a strong pound. If the uncertainty continues expect the pound to fall.
Germany in EU bail-out vow
Germany’s Chancellor Angela Merkel has vowed to implement a permanent bail-out facility amid speculation over a break up of the 16-nation eurozone. A joint statement with French President Nicolas Sarkozy said the two would propose replacing the existing fund that expires in 2013.
Meanwhile the head of Germany’s central bank said the existing fund could be increased if needed. This news may calm the markets as they have vowed to implement a permanent bail-out facility amid speculation over a break up of the 16-nation eurozone.
The markets haven’t really changed their stance on the weak Euro however, and rates for GBP/EUR have increased by 1.3% this week alone, and the current rates is still around a 2 month high, presenting good buying opportunities for those needing Euros.
On Monday, we’ll have a detailed look at the recent movements of the pound vs the Euro and US Dollar, in addition to a breakdown of next weeks data releases that may affect rates.
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